Lucky 13?

July 12, 2018 / Chairman's Blog

Blog Author: Richard Saxon CBE, JCT Chairman

Construction is many industries within one classification. It stretches from the mammoth to the minute, from infrastructure work like HS2 to household repair tasks. Any critique of construction therefore needs to recognise the part of the industry to which it refers. The statistical classification of the industry also fails to include its clients and consultants, essential parts of the cultural and economic system of the built environment. All that having been said, new initiatives at one end of the scale spectrum could create momentum for change across much of the industry.

The UK has a massive programme of infrastructure investment in progress, led by flagship projects like HS2, Heathrow expansion and Hinckley Point power station, the three Hs. £600 billion of work is in the pipeline and there has been real concern that we may not get value for money: the UK pays more for civil engineering works than other EU countries and there is a history of cost and time over-runs, coupled with low profitability, productivity and innovation in the supply side. There is even concern that the capacity to deliver the programme is not there, given the long-term falling industry labour force.

These concerns have led to a flurry of parallel initiatives from the consortium of clients for transport work, the government’s Infrastructure Projects Authority (IPA) and the Infrastructure Clients Group. Each initiative has common themes but different emphasis. They all aim to shift the pattern of thought and behaviour to the long-term pursuit of value for the stakeholders and away from project-by-project focus on lowest first cost. Common components of the three, Transport Infrastructure Efficiency Strategy (TIES), Transforming Infrastructure Performance (TIP) and so-called Project 13, are an emphasis on better client skills, setting up projects more effectively, working in deeper collaboration with suppliers and using digital techniques to capture and use data as the basis of better design, construction and operation.

I concentrate on Project 13, launched in May 2018 by the Institution of Civil Engineers, as it has the most accessible explanatory material available. The material does not however explain the reasons for the name Project 13, which has been the name of a rock band, a source of help for young people in Wales and a branding agency. Project 13 seeks to move infrastructure owners and their consultants and constructors into long-term alliances rather than project transactions. It aims to make these alliances into enterprises, with a focus on long-term value, win-win interest in innovation and a far better approach to risk. It is similar to the concept of Integrated Project Delivery (IPD) as practiced in the USA but is for longer term use over a programme of work. An ‘Integrator’, a firm or group charged with facilitating the programme, pulls together the owner, advisers and suppliers into an enterprise with a governance approach to articulate and deliver true value, create the right commercial environment and promote the right behaviours and leadership. The definition of ‘value’ in this context is a core matter and aims to capture whole-life outcomes for the owner’s present and future customers and society as well as rewarding the alliance members in ways that drive good decisions.

Several infrastructure owners are committed to practice according to the principles of Project 13: Anglian Water has been working this way for a while; Heathrow plans to execute its expansion on this basis. The approach has been designed for newcomers to the idea to progress through a ‘maturity matrix’ of steps, from simple collaboration to integrated, high performing enterprise. These steps cover progress on governance, organisation, integration, digital transformation and owner capabilities.

What has to interest everyone in construction about these initiatives is that the leading Tier 1 contractors and professional advisers will be immersed in them and have their attitudes and business models changed. Supply chains for the major works will reach deep into the construction industry as a whole. Clients outside infrastructure with major programmes, say in universities and healthcare, will find it of interest to emulate Project 13 principles and link with firms who have adapted to working this way. The industry’s strategic goals for 2025 are entirely aligned with those of Project 13. Some great changes are afoot.

This year’s JCT Povey Lecture will be delivered by Richard Threlfall of KPMG. He has played a key part in developing Project 13.